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									             Employment Insurance
             Guide for the Supplemental
             Unemployment Benefit
             (SUB) Program




             Service Canada

Government   Gouvernement
of Canada    du Canada
                                          IN-071-03-07
For further information on the
Supplemental Unemployment Benefit
Program, please contact:

Service Canada
Supplemental Unemployment Benefit Program
120 Harbourview Boulevard
P.O. Box 11,000
Bathurst, New Brunswick
E2A 4T5

Telephone:         1 800 561-7923
Facsimile:         (506) 548-7473

Please note: This guide provides general information only.
In controversial situations, the Employment Insurance
Act/Regulations must govern.

Internet access:

Supplemental Unemployment Benefits (SUB):
http://www.hrsdc.gc.ca/en/cs/sub/0200/0200_000.shtml
Service Canada: http://www.servicecanada.gc.ca
Employment Insurance:
http://www.hrsdc.gc.ca/en/gateways/business/cluster/category/eiie.shtml

Produced by Communications (Insurance)
Service Canada

Printed in Canada
INTRODUCTION ....................................................................................1                                Table of
   Supplemental Unemployment Benefit (SUB) Program............................................1                                   contents
   Advantages of a SUB plan ........................................................................................1
   Plan document(s) ......................................................................................................1
PART I – PLAN REQUIREMENTS ........................................................2
   1.     Identification of employees covered ................................................................2
   2.     Types of unemployment....................................................................................2
             Temporary stoppage of work........................................................................2
             Training ........................................................................................................2
             Illness, injury or quarantine..........................................................................2
   3.     Receipt of Employment Insurance (EI) benefits ..............................................2
   4.     SUB payments when employee is not in receipt of EI benefits ......................3
   5.     SUB payments ..................................................................................................3
             SUB calculation – no other earnings............................................................4
             SUB calculation – regular or training benefits plus other earnings ............4
             SUB calculation – sickness benefits plus other earnings ............................5
   6.     Benefit duration ................................................................................................5
   7.     a) Plan duration ................................................................................................6
          b) Subsequent changes......................................................................................6
   8.     a) Financing ......................................................................................................6
          b) Separate records............................................................................................6
  9.      Other remuneration ..........................................................................................6
 10.      Repayment of EI benefits ................................................................................7
 11.      Trust fund – termination clause ........................................................................7
 12.      Trust fund – vested right ..................................................................................7
PART II – SAMPLE PLAN ....................................................................8

PART III – ADDITIONAL INFORMATION ............................................10
   Record of Employment and EI application ............................................................10
   Verification of EI benefits paid ..............................................................................10
   Payroll deductions ..................................................................................................10
PART IV – PLAN REGISTRATION ......................................................11
   Registration of a SUB plan ....................................................................................11
   Additional documents ............................................................................................11
   Approval and renewal..............................................................................................11
SUB PLAN REGISTRATION FORM
Introduction

Supplemental Unemployment Benefit (SUB) Program                                         Definition

This program allows employers to register Supplemental Unemployment Benefit
(SUB) plans that meet the requirements of article 37 of the Employment Insurance
Regulations and policies set by Service Canada.
The purpose of a SUB plan is to provide supplemental payments to Employment
Insurance (EI) benefits during a period of unemployment due to:

     s   temporary stoppage of work;

     s   training;

     s   illness, injury or quarantine.

The employer chooses which of the above-mentioned types of unemployment he
wishes to supplement.

Note: Employers offering supplements to maternity, parental (including adoption)
and compassionate care benefits do not have to register their plans with the SUB pro-
gram. Information on Supplements to EI maternity, parental and compassionate care
benefits is available by contacting your local Service Canada office or by visiting:
http:www.hrsdc.gc.ca/en/ei/employers/supplements.shtml

Advantages of a SUB plan
                                                                                        Advantages
Employers use SUB plans to increase the employee’s weekly earnings during periods
of unemployment. Payments from registered plans are not deducted from the
employee’s EI benefits.

Payments under a registered SUB plan are not considered as insurable earnings;
therefore, EI premiums are not deducted.

Plan document(s)
                                                                                        Plan
The SUB plan must include a complete description of the benefits and must meet the      document(s)
conditions listed in Part I – Plan Requirements.

One or more of the following documents may be used to describe a plan:

s   a union or association agreement;

s   a trust agreement;

s   a private carrier’s insurance policy;

s   an employee handbook;

s   a personnel policy bulletin;

s   any signed commitment by the employer.


                                                                                                      1
               Part I – Plan Requirements

                Items 1 to 9 are mandatory (with the exception of item 4) and must appear in the
                plan description.

                A sample SUB plan is found in Part II. Each item below corresponds to the same
                number in the sample plan.

Employees      1. Identification of employees covered
covered
               The plan must identify the group(s) of employees covered e.g. all employees, hourly
               paid employees, employees at a certain plant or location, union group(s), etc. It may
               also identify an employee position e.g. accountant, administrator, lawyer, etc. Any
               employee may be covered; however, do not identify individuals by name. When
               employees of affiliated companies are covered, the names of these companies must
               be included.

Types of       2. Types of unemployment
unemployment
               The plan must indicate that it covers unemployment caused by one or a combination
               of the following:

               Temporary stoppage of work

               SUB plans are intended for periods of unemployment caused by a temporary
               stoppage of work. Termination of employment caused by a re-organization or a
               shutdown of a plant or operation is not considered temporary unemployment. SUB
               payments may not form part of a separation package, be used to bridge to
               retirement, nor form any part of a work sharing agreement or short-week benefits.

               Recall rights do not necessarily constitute a reason for determining a lay-off to be
               temporary. The employer should be able to estimate the date of the employee’s
               return to work.

               EI benefits paid for temporary lay-off are regular benefits and are paid to
               claimants who are available for, able to and looking for work. Claimants must
               continue to meet all EI requirements even though they are on temporary stoppage
               of work.

               Training

               Employees must be in receipt of unemployment benefits.

               Illness, injury or quarantine

               The employee must be in receipt of EI sickness benefits.

               3. Receipt of Employment Insurance (EI) benefits
Receipt of
EI benefits    The plan must indicate that the employee must apply for and be in receipt of EI
               benefits.



2
4. SUB payments when employee is not in receipt of EI                                      Non-receipt of
benefits                                                                                   EI benefits
Notwithstanding item 3, the plan may provide SUB payments up to a maximum
of 95% of the normal weekly earnings when the employee is not in receipt of
EI Benefits, and:

s   is serving the two-week EI waiting period; or

s   has insufficient hours of insurable employment to qualify for EI benefits; or

s   has exhausted the EI benefit entitlement.

The employer decides which, if any, of the above situations are covered by the plan.
If an employer introduces a SUB plan to offset the EI two-week waiting period
only, a complete description of the plan must be submitted for approval.

5. SUB payments                                                                            SUB payments
The SUB plan must indicate the value of the payments, either as a percentage of the
employee’s normal weekly earnings, or a fixed amount.

The weekly SUB payment plus the weekly EI benefit rate applicable to this employment
must not exceed 95% of your employee’s normal weekly earnings. It should be noted
that a lump sum payment does not meet this requirement.

There are two acceptable methods of calculating the amount of SUB payments in
order to meet the 95% requirement:

s   the gross weekly EI benefit (benefit rate) is deducted from the 95% calculation.

s   the EI benefit (after the 25% allowable) and the amount of any other earnings are
    deducted from the 95% calculation. This allows the employer to take advantage
    of the 25% that EI allows the employee to earn before deductions are made from
    regular or training EI benefits.

At the present time, the basic EI benefit rate is equal to 55% of the employee’s
weekly insurable earnings up to a maximum payment of $423 per week. Changes
to the basic rate of EI benefits could influence the amount of the SUB payments. The
plan may provide for an automatic adjustment of the SUB payments when the EI rate
is increased or decreased. It should be noted that the basic benefit rate can be altered
based on the following:

s   a legislative change could increase or decrease the EI rate;

s   a family income supplement can increase the EI rate to more than 55% because
    the employee is in a low-income family and in receipt of the Canada Child Tax
    Benefit (CCTB). If the employee is entitled to receive the family income
    supplement, the EI rate will be adjusted automatically.



                                                                                                            3
SUB when              SUB calculation – no other earnings
no other earnings
                       The employee is receiving regular, training or sickness benefits and has no
                       other earnings.

                       Example 1 : SUB payable when no other earnings
                           A. Employee’s normal weekly earnings ......................................................$800
                           B. Employee’s other earnings ..........................................................................$0
                           C. 95% of normal weekly earnings .............................................................$760
                           D. Maximum EI payment ............................................................................$423*
                           E. Calculation of maximum SUB payment (C – D = E) .........................$337

                      SUB calculation – regular or training benefits plus other earnings
Lay-off or training
SUB with other        In any week of unemployment caused by temporary stoppage of work or training, a
earnings              claimant is allowed to earn up to 25% of the EI benefit rate if the benefit amount is
                      $200 or more, and $50 if the benefit amount is less than $200 without reducing the
                      amount of EI benefits received. The claimant must report all earnings. The employer
                      may wish to consider these other earnings and the EI benefit (amount after the 25%
                      allowable) when calculating the SUB payment. Refer to the examples 2 and 3 below
                      for the difference in the SUB payments.



                       The employee is receiving regular or training benefits and also has other earnings.
                           A. Employee’s normal weekly earnings ............................................. ........$800
                           B. Employee’s other earnings............................................................. .........$160
                           C. Maximum EI payment ………...……………………………….............$423*
                           D. 25% of the benefit amount allowable ($423x25%)................…….. ......$106
                           E. EI benefit [C - (B-D) = E] [$423 - ($160 - 106)]…………........... .$369

                       Example 2: SUB payable without consideration of other earnings
                                  (Sample Plan – Part II - item 5 option A or B)
                         A. 95% of normal weekly earnings .............................................................$760
                         B. Maximum EI payment.............................................................................$423*
                         C. SUB (A - B = C).....................................................................................$337

                       Example 3: SUB payable if the employer includes other earnings and EI benefit
                                   (Sample Plan – Part II - item 5 option C)
                         A. 95% of normal weekly earnings .............................................................$760
                         B. EI Benefit (as per E above) .....................................................................$369*
                         C. Other earnings .........................................................................................$160
                         D. SUB (A - B - C = D) ..............................................................................$231




4
SUB calculation – sickness benefits plus other earnings                                                               SUB for
                                                                                                                      sickness
If a claimant receives earnings during a period of absence from work because of
illness, 100 % of the earnings (excluding registered SUB) are deducted from the EI
benefits paid for that week. The claimant must declare all earnings. The SUB
payment will be the same in both situations, as shown in examples 4 and 5 below.

 The employee is receiving sickness benefits and has other earnings
    A. Employee’s normal weekly earnings ......................................................$800
    B. Employee’s other earnings ......................................................................$160
    C. Maximum EI payment.............................................................................$423*
    D. EI benefit (C - B = D) ($423 - $160)...............................................$263

 Example 4: SUB payable without consideration of other earnings
    A. 95% of normal weekly earnings .............................................................$760
    B. Maximum EI payment.............................................................................$423*
    C. SUB (A - B = C).....................................................................................$337

 Example 5: SUB payable if the employer includes other earnings and
            EI benefit
    A. 95% of normal weekly earnings .............................................................$760
    B. EI benefit (as per D above) .....................................................................$263*
    C. Other earnings .........................................................................................$160
    D. SUB (A - B - C - = D)..........................................................................$337


*Supplemental unemployment benefits may be paid to a claimant who worked for more
than one employer. To calculate the payment, each employer offering a SUB must
identify the portion of the weekly EI benefit rate based on his employee’s insurable
earnings. To obtain confirmation of this amount, please contact your local Service
Canada Centre.

6. Benefit duration                                                                                                   Benefit duration

The plan must indicate the maximum number of weeks for which the SUB
payments will be made. Some plans pay benefits for varying periods based on
years of service, salary or employee groups. The regulations do not set a
minimum or maximum number of weeks for the payments.




                                                                                                                                         5
Plan duration        7. a) Plan duration
                     The plan must indicate a start and end date.

                     Approval from Service Canada-SUB Program must be received before the imple-
                     mentation date of the plan. The plan's duration must be at least one year. However,
                     it can be in effect for up to five years. If the plan is contained within a collective
                     agreement, it will be valid until the expiry date of that document.

Subsequent               b) Subsequent changes
changes
                     The plan must indicate that a written notice of any change will be given to Service
                     Canada-SUB Program within thirty (30) days of the effective date of the change. This
                     also includes changes to the administrators or contact persons.

                     If there is a major reorganization in the company, such as a merger or a take-over, the
                     employer must send us details of the changes including the new or updated plan
                     description.

Financing            8. a) Financing
                     The plan must indicate the method used to finance the SUB payments. Financing is
                     the sole responsibility of the employer and must be done in one of the following
                     three ways:
                         s   making the payments from the general revenues of the company;

                         s   making deposits into a trust fund established to provide SUB payments;

                         s   paying 100% of the insurance premiums that are required to finance the SUB
                             payments.
Separate
records                  b) Separate records
                     The plan must indicate that the employer will keep a record of all SUB payments.

Other remuneration   9. Other remuneration
                     Payments in respect of guaranteed annual remuneration, deferred remuneration or
                     severance pay must not be reduced or increased by SUB received under the plan.

                     These amounts include any benefits to which the employee is entitled such as sick
                     leave, vacation leave, commissions, bonus, etc.




6
10. Repayment of EI benefits                                                          Repayment of
                                                                                      EI benefits
An employee whose net income (including EI and SUB) is above 1.25 times the
maximum yearly insurable earnings may be required to repay some or all of the EI
benefits received.

The employer may offset the repayment of EI benefits under the SUB plan. The
amount of the offset when added to the previous payments (SUB and the gross EI
benefits from that employment) must not exceed 95 percent of the employee’s normal
weekly earnings. Therefore, if the SUB plan has supplemented to 70%, the maxi-
mum amount of the offset cannot exceed 25% of the employee’s normal weekly
earnings multiplied by the number of weeks in which EI benefits were received.

The amount of repayment is calculated when completing the Income Tax return and
is based on a taxation year. For more information on repayment of EI benefits con-
tact your local Service Canada Centre.

11. Trust fund – termination clause                                                   Trust fund -
                                                                                      termination clause
When the plan is administered through a trust fund, it must indicate that upon
termination of the plan, all of the remaining assets will:
    s    revert to the employer;

    s    be used for ongoing payments under the plan; and/or

    s    be used for the administration costs of the plan.


12. Trust fund – vested right                                                         Trust fund -
                                                                                      vested right
The plan must indicate that the employee has no vested right to SUB payments
except during periods of unemployment specified in the plan.

 Note:
 SUB plans may specify any other requirements imposed by the employer for the
 receipt of the SUB, e.g. the minimum period of employment required before pay-
 ments are made; that the employee must return to work for a specified period after
 supplemental unemployment benefits are paid; conditions set by a collective agree-
 ment, etc.

 The employer may provide for varying benefits (e.g. benefit duration, payments,
 type of coverage) for certain employee groups within the plan.




                                                                                                           7
    Part II – Sample Plan

    The following sample contains all the plan requirements. The information in
    bold should be included in your plan description. Any information following
    the asterisk (*) is an example, and should be replaced with information reflecting
    your own situation.

    Details on each of the following items are found in Part I – Plan
    Requirements.

     1. The following group(s) of employees is/are covered by the plan: * All full
        time employees with one year of service.

     2. The plan will supplement EI benefits for periods of unemployment caused
        by * a temporary stoppage of work.

     3. Verification that the employees have applied for and are in receipt of EI
        benefits will be made before SUB payments are paid.

     Item 4 is needed only when the employer will pay a SUB during periods of non-
     receipt of EI (see item 4 Part I).

     4. The SUB is payable at * 95% of the employee’s normal weekly earnings while
         * the employee is serving the two-week EI waiting period.

     5. Please choose one of the following options:

        Option A (percentage or fixed amount): The benefit paid under this plan is set
        at * 40% of the employees' normal weekly earnings or $200 (fixed amount).
        The weekly SUB payment plus the gross amount of EI benefit from this
        employment will not exceed 95% of the employee's normal weekly earnings.

        Option B (automatic adjustment): The plan provides that the gross amount
        of EI benefit from this employment plus the SUB payment will equal
        * 95% of the employee’s normal weekly earnings.

        Option C (other earnings considered): The plan provides that the SUB pay-
        ment, any other earnings plus the EI benefit (amount after the 25% allow-
        able) from this employment will equal * 90% of the employee’s normal
        weekly earnings.

     6. The SUB payment will be paid for * 10 weeks.

     7. a) The duration of the plan is from * January 5, 2003 to * December 31,
           2005.

        b) Service Canada - SUB Program will be informed in writing of any
        change the plan within thirty (30) days of the effective date of the change.

     8. a) The plan is financed *by the employer's general revenues.

        b) A separate record of all the SUB payments will be kept.


8
 9. Payments of guaranteed annual remuneration, deferred remuneration, or
    severance pay will not be reduced or increased by payments received under
    the SUB plan.

  Item 10 is needed only when the employer wishes to offset the repayment of EI
  benefits paid for temporary stoppage of work or training.

 10. This plan provides for an offset of EI benefits that may have to be repaid as
     part of the employee's income tax return. The weekly gross EI benefit from
     this employment, the SUB payments previously paid plus this offset amount
     will not exceed 95% of the employee’s normal weekly earnings.

   Items 11 and 12 are needed only when SUB payments are financed by a trust fund.

 11. On termination of the plan, all remaining assets will revert to the employer, be
     used for SUB payments and/or be used for the administrative costs of the plan.

 12. Employees do not have a right to SUB payments except during the period
     of unemployment specified in the plan.

Signature(s) of authorized officer(s).

Date* date of signing.




                                                                                        9
                     Part III – Additional Information

ROE &                Record of Employment and EI application
EI application
                     The employer completes a Record of Employment (ROE) when the employee is sep-
                     arated from employment because of a temporary stoppage of work, training, illness,
                     injury or quarantine. The employer also indicates that the employee is entitled to
                     supplemental unemployment benefits by writing "Registered SUB" in the "other
                     monies" section. The employee must submit this form to the local Service Canada
                     Centre when applying for EI benefits. The employer’s business number for payroll
                     deductions (RP) indicated on the ROE will be used to verify whether the employer
                     has an approved registered SUB plan.

                     The mention of SUB must also be indicated on the EI application and the amount
                     of SUB must be indicated on the bi-weekly claimant's report or declared through the
                     Telephone Reporting Service.

EI payments          Verification of EI benefits paid
verified
                     The employer or the administrator responsible for paying the SUB must verify that
                     the employee is in receipt of EI benefits before the payment can be made.

                     There are two methods of verifying the receipt of EI benefits:

                     s   an examination of the employee’s EI benefit cheque stub; or

                     s   the receipt of a system-generated report provided by Service Canada. This report
                         is generated only at the employer's request and contains the same information as
                         the EI benefit cheque stub.

Payroll deductions   Payroll deductions
                     Payments from a registered SUB plan are not insurable; therefore, EI premiums
                     are not deducted. SUB payments are generally subject to Canada Pension Plan or
                     Quebec Pension Plan deductions as well as income tax. For more information on
                     this subject contact a Canada Revenue Agency office or the Régie des rentes du
                     Québec.




10
Part IV – Plan Registration

Registration of a SUB plan                                                                      Registration

The employer must submit a copy of the SUB plan with the enclosed registration
form and any additional documents that may be required to:

                 Service Canada
                 Supplemental Unemployment Benefit (SUB) Program
                 120 Harbourview Boulevard
                 P.O. Box 11,000
                 Bathurst, New Brunswick
                 E2A 4T5
                 Telephone: 1 800 561-7923
                 Fax: (506) 548-7473
                 Visit our website at:
                 http://www.hrsdc.gc.ca/en/cs/sub/0200/0200_000.shtml

Additional documents
                                                                                                Additional
The employer must submit the following documentation, if applicable, with the                   documents
SUB plan:

s   a copy of the current collective agreement(s), if the plan covers employees who
    are members of a certified bargaining unit, i.e. unionized employees;

s   a copy of the relevant section of the insurance policy used to administer the SUB
    plans ( if the policy does not contain a complete plan description, a document
    signed by the employer containing the missing information must be included);

s   a copy of the Trust Agreement;

s   any company policies and/or personnel guidelines containing information about
    the plan, as well as any declarations or documents the employees have to sign to
    receive the SUB payment.

Approval and renewal
                                                                                                Approval and
The registration date of the SUB plan is the date on which it is submitted, if all the          renewal
required conditions are met and all supporting documents are received. The plan
will be registered under the employer’s business number for payroll deductions (RP)
and a notification of the approval will be sent to the employer. Also, the local Service
Canada Centre will be advised of the registration of the plan. Employers who are
already participating in the program will receive a request to renew from Service
Canada-SUB Program.

When a plan does not qualify, the employer is advised of the change(s) that must be
made. A copy of the amendments to the plan should be submitted as soon as possible.
Until the plan is registered any amounts paid will be treated as earnings and may be deducted
from the employee’s EI benefits. Service Canada's decision on the SUB plan's approval
cannot be appealed. However, a review of the decision may be requested.



                                                                                                               11
     NOTES:




12
NOTE : YOU MUST ENCLOSE A COPY OF YOUR SUB PLAN

								
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